• Apr 23, 2007

Reporting on one luxury car hitting the market after another and a seemingly endless race for the latest in technological breakthroughs, it seems hard to believe, but the fiercest competition in the automotive industry is emerging in the ultra-low cost segment. As markets like India and China continue to develop, their billions of citizens are moving up from bicycles and scooters to low-cost cars, and the sticker prices keep getting lower and lower.

Four years ago, India-based Tata Motors vowed to make a car which will sell for $2500. It seemed like a joke at the time, but that car is almost ready to hit the market, and the competitors are getting ready to put up a fight. With its bare-bones Logan sedan, Renault has the leg up on other automakers including Toyota, Volkswagen, Fiat, PSA and GM Daewoo, which are all preparing to get in on the low-cost market.

Carmakers are keeping costs down by developing the cars in India, and though the profit margins are dramatically lower than in premium segments, the companies are clamoring to establish their footholds in the emerging markets and hope that the volume will make it all worthwhile.

While the ultra-affordable subcompacts are being designed with developing countries in mind, automakers are surprised to find their no-frills offerings are being received well even in Europe, where customers see the savings as a worthwhile alternative to spending thousands more on higher-priced cars. Standard safety features and emissions control mean that a car that would cost $3000 in India costs $6-7000 in a Western country, but even at those prices the cheap imports undercut anything else on the market by thousands. It's being hailed as an impending revolution in the automotive industry every bit as pivotal as was the Ford Model T.

[Source: Business Week]



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  • 17 Comments
      • 7 Years Ago
      The cost of the materials to build a car are actually low. It is the wages, pensions, health care and profit that make a car cost so much. It costs VW $2400 in materials to build a Golf in Germany. It costs Renault about $1800 to build the Logan pictured.
      • 7 Years Ago
      There goes Suzuki's sales in India...better hope is better than the Yugo. Wait it isn't a Hybrid model with super cool LCD showing consumption with BIG NUBMERS? No chance for US sales! Good luck Tata!
      • 7 Years Ago
      Doesn't this go against that WHO thing.
      • 7 Years Ago
      Hopefully someone will figure out a way to make an ultra low cost vehicle tough enough to make it in America.
      • 7 Years Ago
      I saw the Logan Wagon in France. Apart from the sideway opening rear hatch it seems really practical, especially the diesel version (toping off around 13000euros). It's def not for the people lookin to buy a benz||beamer but for the price of a traditional used car you get a new one with a few years of warranty. Of course the base models don't come with power stearing ( drove an old Renault 5 (LeCar for the US) during my stay in Europe and man parallel parking it was hard the first few weeks lol).
      • 7 Years Ago
      I wonder if that is why GM is putting up a factory there as well.
      • 7 Years Ago
      An all new army of cars in India and China without emission controls?

      We'd better hope that the Global Warming skeptics are right.
      • 7 Years Ago
      I like the Logan. It is not a bad looking car. If it is dependable and undercuts current prices by a few thousand I would buy one. My worries would be with the Romanian Steel they use. It would have to be treated to withstand mid west conditions. Remember the rust of the 60's and 70's. I don't want to live thru that again.
      • 7 Years Ago
      hehe. tata in filipino means old person.
      • 7 Years Ago
      I wonder how and where westerners think that in India and China emissions do not count ? Please do not foeet it is you who screwed up this planet with your V6 and V8 engines. All Indian cars rolling off the line today meet with strict India stage 2 and 3, our automotive evolution is happening much faster then the west, most cars sold in India give you an average 40 -50 mpg, how many companies in your own countries perform as well ?
      • 7 Years Ago
      I have been saying this for quite some time now. I find it hard to believe that a Jeep Wrangler would cost more than 20,000 dollars, but it does and I still can't tell why. (nor am I asking)

      I remember when cars came with manual everything... manual transmission, manual breaks, manual roll up windows, manual adjusting rear view mirrors, even manual steering (but thats going back aways).

      Even though cars like the Fit and the Yaris, and Aveo, and all the others are getting there they are still expensive.

      The Aveo maxes at 13,500; the fit at 15,970; the Yaris at 12,050... these are way out of price, I bought my Mazda Protege5 for 15,000. and now the Mazda3 sells for close to 21,000!!!

      I think a 5-7K car is just what western countries need, and costs can be saved everywhere from R&D to content.
      • 7 Years Ago
      Tata said, it would be a four-door passenger car with a rear engine, essentially steel with some plastic parts. The car would have a continuous variable transmission—easier for women to drive— and would have both petrol and diesel versions. Source: auto.indiatimes.com
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